Osborne: Brown govt responsible for Libor scandal

The tension and speculation over who is to blame over the rate-rigging scandal heated up today as the chancellor claimed his predecessors were "clearly involved".

In an interview with the Spectator, Osborne accused the former Labour government of being implicit with the manipulation of the Libor rate.

It comes just after Barclays sent a memo saying the Bank of England encouraged the bank to lower its borrowing rate.

Mr Osborne was in haste to clear the central bank, however: "They are not people who pull their punches, and they're very clear that the Bank did not issue instructions to Barclays to cut its Libor rate."

Instead, the Chancellor claimed: "My opposite number was the City minister for the part of this period and Gordon Brown's right hand man for all of it.

"So he has questions to answer. That's Ed Balls, by the way."

The question of what type of inquiry would look into the scandal was fought out earlier at prime minister's questions with Labour pushing for a judge-led approach and the government a parliamentary inquiry.

In response to the interview, Chris Lesley, the shadow treasury minister, said: ""This is desperate stuff from George Osborne – lashing out in a frenzied way that demeans the office of the Chancellor of the Exchequer.

"It’s now increasingly clear that he isn’t interested in getting to the truth, only in playing party politics and throwing around false allegations with no evidence.

"This is why we need an independent, forensic, public and judge-led inquiry that can rise above party politics. David Cameron and George Osborne need to explain why they have spent the last week desperately trying to resist one."